Posted by: ericgruber
in Blogs on Mar 31, 2011
Every time, Google changes its algorithms - it causes a frenzy among those internet marketers relying heavily on the search engines. The latest change made many marketers stock up on Maalox and Pepto Bismol as it made them literally sick to their stomachs. Google's latest change was an attack on article directories and content farms like Ezinearticles.com.
Posted by: kubica
in Blogs on Mar 30, 2011
There is a lot of attention directed at small businesses this year. President Obama talked about the need to help and support small businesses in his State of the Union address. And one outcome was the launch of Startup America. Also, states are talking about easing regulations and the tax burden on small businesses in their quest to reduce unemployment.
Posted by: kubica
in Blogs on Mar 30, 2011
Does a leader need to be the smartest person in the company to achieve growth and customer satisfaction? No.
Posted by: kjaramillo
in Blogs on Mar 26, 2011
Posted by: bbachrach
in Blogs on Mar 23, 2011
The management team cannot believe that their company's profitability continues to decline at a consistent rate, quarter after quarter. "How can this be?" says the Chief Marketing Officer. "Five of our customers have named the company supplier of the year! The crystal bowls and the plaques with our name on it are displayed in the front lobby."
Posted by: mountainassociates
in Blogs on Mar 22, 2011
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We are just about to facilitate another Organizational Transactional Analysis workshop, which this time, is about resilience. Whilst discussing the topic my partner Chris came up with an article by Pat Crossman about Permission, Protection and Potency. These concepts are usually used for the psychotherapist toward and in relationship with their client:
Posted by: DragonLeaders
in Blogs on Mar 15, 2011
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Hope you are well and like me, feel Spring in the air. I'll enjoy every minute of it before heading to Canada for three weeks at -15C. Now it's time to spring-clean the house but what about your business?
According to the Chinese tradition, people would clean their kitchesn relentlessly to welcome the Kitchen God with blessings of prosperity in the new year. Here are my top 3 tips for spring-clean the business:
1. Keep it simple - however much you want to tell customers and clients everything you can do for them, people can only remember what impressed them the most. These days everybody is competing for everybody else's memory, you need to keep your offering, brand and key message simple, VERY simple.
2. Keep it relevant - you look at what your competitors and peers do and promote, and think: "I can do a bit of that". Think carefully. What looks and sounds good for others may not be suitable for your business. Instead of distracting yourself and most importantly your customers, focus on what you do best.
3. Keep it clean - most if not all businesses have a website, this is where the customer journey starts. Your prospects will likely make up their mind if they are going to do business with you. It is not just about what your website say but how it looks. De-clutter the design and text; make it easy on the eye. In fact I am giving my website a new look this week!
If you take these 3 simple steps, you will be ahead of many other businesses in showing respect to the prospective customers and clients. It is not long before the new financial year begins, so welcome your prospects like "Kitchen God" now.
It is the year of Rabbit according to the Chinese calendar. Without reading the animal signs, rabbits for me symbolise force of life and energy of bounce. Take a look at how you, too, can take sales and customer service to a leap with Sun Tzu's War of Art strategies and many more in the online training course Dragon Business now.
Posted by: nwhalebo
in Blogs on Mar 15, 2011
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I was working on some sales training material this morning focusing on providing some fresh training for different personalities - training which compliments a persons natural style and changes behaviour to meet performance targets - when I came across this interesting quote.
Posted by: SCArt
in Blogs on Mar 14, 2011
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Posted by: financial-training
in Blogs on Mar 04, 2011
Financial Training Associates Ltd provides an answer to the course question: “In
valuation modelling, where does the terminal value formula come from?” This question was recently posed by a delegate on one of Financial Training Associates’ Excel modelling courses.
1. The terminal value formula. In a discounted cash flow (DCF) valuation model, we can’t forecast forever. Even an Excel spreadsheet has a limit to the number of columns it contains! The terminal value solves this problem by answering the question: “What’s the business worth at the end of the forecast period?” In the final year of an Excel financial model you will usually see a big lump of cash (the terminal value). What we are doing in the model is trying to work out what the company we are valuing is worth at the end of the forecast period, or what it might be able to be sold for. Many analysts are used to seeing the following formula used to calculate terminal valuation in financial modelling (see the blue box in the slide below, which comes from one of FTA Ltd’s training courses). In the formula, on the top we have next year’s expected free cash flow, divided by [discount rate less long term growth rate]. But where does the terminal valuation formula itself come from?
2. The formula for terminal value is an application of an old valuation formula. The formula is an application of an old valuation methodology called “the dividend discount model” or the “Gordon growth model”, where a business is valued as a stream of its dividends. This model pre-dates discounted cash flow valuation, and the capital asset pricing model on which DCF is based. What we are doing at the back end of our financial model is applying a very old methodology to determine the valuation of the company at the end of the cash flow forecast period.
3. The dividend growth model or the Gordon growth model. The formula for the Gordon growth model is shown below. You can see how the terms match up with the same terms for calculating terminal value.
4. Derivation of the Gordon growth model. The Gordon growth model holds that a company’s valuation is the sum of that company’s discounted forecast dividend payments. For more detail see any good corporate finance textbook or Gordon, M. (1959) “Dividends, earnings and stock prices”, Review of Economics and Statistics, Vol. 41, pp. 99-105.
This long formula is known in maths as a “Geometric series”, where the next term in the series is calculated by multiplying the previous term by a constant. In this case the constant is (1+g)/(1+r).
5. A bit of algebra that you can skip if you wish. If we multiply both sides of the equation by the constant (1+g)/(1+r) we get two different versions of the same long formula.
This second new series is the same as the original, except that the first term is missing from the left hand side. Subtracting the new series from the original, cancels every term in the original but the first.
With a bit of simplification…
Voila – at the bottom we have it: the Gordon growth model! You can see how the terms match up to the same terms used in the terminal value formula.
6. Big sensitivities in financial modelling for valuation. Any analyst who has spent a little bit of time modelling will be able to tell you that big sensitivities on terminal value and hence valuation are the final year cash flow, the long term growth rate, and the discount rate. Making small changes to any of these can result in a very different terminal value. And terminal value can end up accounting for a large proportion of total valuation in a financial model. To summarise, the terminal value formula used in DCF valuation modelling is an application of a very old (and otherwise now regarded as outdated) valuation methodology, predating the DCF methodology itself. We can put an awful lot of work into modelling intermediate cash flows as accurately as we can, and then try to be very precise about how we discount those cash flows in valuation. But when terminal values (where we are essentially just dividing one quite rough number by another rough number) account for a large proportion of overall valuation, perhaps we should be answering another question. Instead of discounted cash flows, should DCF stand for “Deceit by Computer Fraud”?
About the author: training company Financial Training Associates Ltd is a provider of
valuation modelling and other finance-related courses for accountancy, banking, law and other professionals.
Posted by: jbeals
in Blogs on Mar 03, 2011
Have you ever seen The Blind Side? It's an acclaimed movie based on a true story first described in a best-selling book by Michael Lewis. It's quite inspiring.
